How to Handle Contract Disputes Without Losing Your License
Contract disputes in the construction industry are common. Issues with suppliers, change orders, or delays may lead to legal battles or simple disagreements. Others can escalate more quickly, especially if the dispute is over scope-of-work, workmanship, or misrepresentations. For any licensed contractor, these disputes can be more of an issue, as they could impact your contractor’s license with the CSLB. Knowing how to protect your license while handling a contract dispute is key to your long-term success.
At Plumtree & Brunner, LLP, our California construction lawyers know how to protect your license and still fight for your rights under a contract. Navigate the complex state requirements and contract provisions by relying on your skilled attorney.
Why Contract Disputes Put Your License at Risk
Contractors in California know the facts: California is heavily regulated when it comes their licensing. The CSLB enforces strict rules and your license could be at risk if they think you violated any of those rules. Someone may file a complaint with the CSLB as a tactic in a contract dispute, setting off a course events you now have to deal with.
Even if the dispute is primarily contractual, the CSLB can investigate issues such as:
- Poor workmanship complaints
- Failure to follow contract requirements
- Project abandonment
- Failure to pay subcontractors
- Failure to pay suppliers
- Misrepresentations or fraud
- Breach of contract
- Violations of Business & Professions Code
Start With a Legally Compliant Contract
The best way to prevent disputes in the first place is with a strong contract. You want one that is legal compliant from the start. Too many contractors fashion their own without legal assistance, or rely on internet forms that claim to meet California’s requirements. Missing or incorrect terms could put your license at risk and expose you to liability.
A compliant contract should include:
- Detailed scope of work
- Project timeline
- Project milestones
- Payment schedule that follows California’s down-payment and progress-payment rules
- Change-order procedures
- Notice of right to cancel (for applicable projects)
- License number and required disclosures
- Warranty terms
- Procedures for dispute resolution
A well-drafted contract not only protects your business but also demonstrates professionalism if the CSLB reviews your documentation.
Document Everything From Day One
Thorough documentation is one of the most powerful tools for protecting your license during a dispute. Contractors should maintain:
- Daily logs
- Photos and videos of work performed
- Copies of all change orders
- Emails, texts, and written communications
- Delivery receipts
- Invoices
- Inspection reports
- Payment records
This evidence is powerful anytime you face a complaint.
Address Problems Early and Professionally
Many disputes get worse because of a failure to communicate well. Emotions can get the better of people sometimes, but best practices include:
- Acknowledging concerns quickly
- Offering reasonable solutions
- Providing written explanations of delays or changes
- Keeping emotions out of communications
- Avoiding threats
- Not using defensive language
Use Change Orders Correctly
California law requires that change orders be:
- In writing
- Signed by both parties
- Clear about additional costs and time impacts
Performing extra work without a signed change order can lead to nonpayment, disputes, and CSLB violations.
Avoid Abandonment Claims
To avoid abandonment allegations:
- Provide written notice of the issue
- Offer an opportunity to cure
- Document nonpayment or breach
- Follow contract termination procedures
- Consult legal counsel before leaving the project
A well-documented paper trail protects you if the client files a complaint.
Respond Promptly to CSLB Complaints
If a complaint is filed with the CLSB, don’t ignore it. The agency expects you to cooperate and do your part in the investigation.
Contractors should:
- Respond by the stated deadline
- Provide requested documents
- Remain professional and factual
- Avoid admitting fault prematurely
- Seek legal guidance if the allegations are serious
Hire an Experienced California Construction Lawyer to Protect Your License During a Contract Dispute
Having an attorney at your side can make a big difference during a construction contract dispute. They help you stay compliant with your license requirements and protect yourself against wrongful allegations, or others violating the contract you negotiated.
Our team at Plumtree & Bruner, LLP helps you with your California construction needs. Contact us today for a consultation.
